Question

The supply curve of the industry (perfect competition) is a _________________.

• A. Lateral summation of the supply or cost curves of the individual firms
• B. Lateral summation of the average revenue curve of the firm
• C. Lateral summation of the demand curves of the firm
• D. U shaped curve

Answer 1

The correct option is A Lateral summation of the supply or cost curves of the individual firms

The supply curve of industry, under perfect competition, is lateral summation of that part of short run marginal cost curves of the firms which lie above the average variable cost constitutes the supply curve of the industry.